The focus on global terrorism since 9/11 has fundamentally changed the relationship between business operators and Customs Authorities worldwide. The threat of terrorist organizations using legitimate supply chains to smuggle personnel and weapons of mass destruction across international borders has put Customs at the front line in the fight against terrorism and has placed a huge responsibilities on businesses that own and operate those supply chains. The World Customs Organisation (WCO), which represents Customs from 171 member countries, has responded to this threat by developing the concept of the Authorised Economic Operator (AEO). This concept is central to the goal of world governments, to secure and facilitate global trade by promoting the seamless movement of goods through secure international supply chains. The EU Commission has introduced regulations that implemented the AEO concept since January 1st, 2008.
Why become an AEO?
EU Customs are in the process of implementing an EU-wide Risk Management Framework, based on Pre-Arrival and Pre-Departure Declarations for all movements of goods into and out of the EU. Companies that have achieved AEO Certification will receive a low security risk rating in this Risk Management Framework, leading to what is effectively a “Fast Lane” for their shipments. Even if a shipment is randomly selected for Customs inspection, the AEO’s shipment will be given priority over non-AEO shipments.
Additional benefits include Guarantee Waivers, Simplified Customs Declarations and Mutual Recognition of AEO status by major non-EU Customs Authorities. Also, AEO Certification will become a global “Quality Mark” for supply chain security.
How can we help?
We can provide a flexible range of services to help achieve AEO Certification:
- A Readiness Assessment to identify a company’s current status versus AEO requirements and to develop a project plan, including scope, schedule, budget and resources.
- Project Management of the Self-Assessment and Application phases.
- Mapping of the supply chains and a Security Risk Assessment. Co-ordinating the implementation of necessary remedial measures.
- Writing policies/procedures, compiling all supporting documentation and completing the Application.
- Assisting with the Customs evaluation.
- Developing an ongoing process for maintaining AEO Certification status
What is an AEO?
An AEO is a business that is certified as a low risk by Customs. In order to achieve this certification, a business is assessed based on
- Its record of compliance with Customs requirements
- The adequacy of its Accounting and Logistical System
- Its financial solvency
- The security of its internal operations and supply chains
- The certificate is awarded by Customs in one Member State, but is recognised by all EU Member States
Further information is available here Developments in Worldwide Customs Regimes.pdf
What are the differences between C-TPAT and AEO?
- C-TPAT is purely concerned with security considerations, while an AEO must satisfy requirements in a number of categories:
- A satisfactory record of compliance with Customs regulations
- An acceptable financial and logistical system
- Safety and Security of operations and supply chains
- C-TPAT is concerned only with imports into the US and not with exports. AEO is concerned with all movements of goods into and out of the EU
What is involved in becoming an AEO?
The first step is a self-assessment of the business against the above four categories of requirements. The next step is to submit an application to Customs, with the completed self-assessment and supporting documentation. Customs then complete a detailed evaluation of the application and award an AEO Certificate, if all requirements are satisfied.
Why go for AEO Certification now?
The uptake on AEO Certification reflects a pattern that is similar to that experienced with C-TPAT in the US – low numbers in the first two years. However, there was a sharp increase in applications for C-TPAT in subsequent years. As the new Customs regime begins to impact on international supply chains it is expected that there will be a dramatic increase in the number of companies applying for AEO Certification.
The two-tier Customs regime provides what amounts to a Green Lane for AEOs.
- In the event that an AEO consignment is randomly selected for Customs control, the AEO
- Has the possibility of prior notification of control
- Receives priority treatment over non-AEO consignments and
- Can choose the location for the control inspection
Other benefits include:
- Reduced data requirements for pre-arrival/-departure declarations
- Easier access to Customs simplification procedures
- Waivers from Customs bond guarantees
Concessions from non-EU Customs Authorities as Mutual Recognition treaties are agreed with the US, Japan, China, Switzerland, Norway and other significant trading partners
Over time, AEO is expected to become the Quality Mark for secure international supply chains and trusted businesses. Businesses that do not achieve AEO status will be seen as less attractive business partners.
Existing AEO's in Ireland:
A number of companies in Ireland have already received AEO status, these include:
Apple, Atlantic Industries,Diageo, Kerry Ingredients, IBM, Pepsi-Cola, Medtronic, Organon, and Philips.
For further information on Authorised Economic Operator status please visit www.revenue.ie/customs or www.europa.eu
We can provide a flexible range of services to help achieve AEO Certification:
- A Readiness Assessment to identify a company’s current status versus AEO requirements and to develop a project plan, including scope, schedule, budget and resources.
- Project Management of the Self-Assessment and Application phases.
- Mapping of the supply chains and a Security Risk Assessment. Co-ordinating the implementation of necessary remedial measures.
- Writing policies/procedures, compiling all supporting documentation and completing the Application.
- Assisting with the Customs evaluation.
- Developing an ongoing process for maintaining AEO Certification status
Our Expertise:
Jerry O’Flaherty
A Senior Supply Chain Consultant with formal qualifications in Supply Chain, Finance and Engineering. More than 25 years experience of Supply Chain Management with leading multinational companies. Has successfully Project Managed many large ERP and supply chain projects. Jerry has also acted as a Management Consultant to large companies in various industries, providing consultancy in various aspects of supply chain management.
He has managed two major AEO projects for a world-leading ICT company, bringing both projects from initial scoping and planning through self-assessment and application to successful achievement of AEO Certification. These projects encompassed very complex business models, with extensive international supply chains.
Please email info@leanscm.com for further information.
