8 benefits of AEO certification for importers/exporters
The attacks on New York City on September 11, 2001 changed all of our lives. This attack to the world's financial centre called into question all the security procedures in place at the time with regard to international transit in people and goods. This fact is undoubtedly the origin of the creation of the figure of the Authorized Economic Operator at European level and of the advantages that this status confers on certified companies.
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- Comprehensive guarantees at a reduced fee
- Centralised national and European office
- Authorization of special regimes
- Reduced documentary and physical checks: fewer red and orange channels
- Prior notification in case of customs control
- Priority processing if selected for inspection
- Choice of the specific inspection site
- Mutual Recognition
In the same way that the way we cross borders on our trips has changed, the controls and demands on security, which have been incorporated since that date, have been aimed at making the international logistics chain more secure.
Almost immediately after the attacks, the US government approved the creation of a statute of "confidence" for economic operators who meet strict requirements, called C-TPAT. The fundamental basis of that status was the assessment of the risks linked to the flows of goods, controlling those risks before the customs declarations themselves.
It was not until 2006 that the figure homologous to the American C-TPAT statute was created in Europe, under the name of AEO (Authorized Economic Operator).
The foundations of the status are the same in Europe: collaboration between customs and operators who voluntarily meet a wide range of criteria and work in close cooperation with customs authorities to ensure the common goal of supply chain security, under the principles of transparency, accuracy, fairness and mutual accountability.
The relationship between AEO operators (those who achieve certification) with the control bodies of their respective countries is twofold: on the one hand, AEO companies undertake to comply with customs and tax regulations and to communicate any difficulties in achieving such compliance, and on the other, the country control body undertakes to support in all necessary ways the authorized economic operators to achieve such compliance.
The AEO programme is open to all economic operators, including small and medium-sized enterprises and regardless of their role in the international supply chain: manufacturers, exporters, freight forwarders, distributors, warehousemen, dispatchers, carriers, importers...
An Authorised Economic Operator is therefore one who, in the context of his customs operations, is considered reliable throughout the territory of the European Union, and who is therefore entitled to enjoy various advantages there.
There are two types of certification to which any company can aspire: Customs Simplifications and Security and Protection. The former can benefit from various simplifications in terms of customs procedures and the latter benefit from specific facilities relating to customs controls and security and protection when goods enter or leave the customs territory of the Union.
The main benefits to which a certified AEO company can aspire are:
Certain customs procedures, especially those that may temporarily suspend payment of customs duties and other import taxes, require normally the presentation of guarantees to the control body to cover the possible non-payment of the amount in suspension at the stipulated time.
The amount of these guarantees (potential or real), to be provided by the AEO operator, by means of guarantees, surety insurance, cash receipts, etc., will be significantly lower than that which must be provided by the rest of the non-certified operators, and may even, in some cases, be exempt from guarantees.
Generally, any company must hire the services of a customs representative to carry out export or import clearance procedures. When a company decides to present its declarations in its own name without having to resort to a customs agent, it has the possibility of applying to the country control body for regional centralised clearance authorisation, this authorisation being limited to entries or exits by regional customs offices, in the first case, and to the various offices belonging to the region in the second case.
Well, AEO operators can request authorisation to carry out customs clearance on their own behalf by any national agency, and in a short time, by any European agency, thus being fully autonomous with regard to the declarations of their international trade operations.
The Customs Code of the Union, 952/2013, which came into force in 2016, raised the requirements to be met by any company applying for an authorisation for any of the special procedures provided for in the regulations (customs warehousing, inward processing procedure, ...) almost to the point of "obliging" applicant companies to meet the requirements for obtaining AEO certification.
Therefore, if the company is already an AEO, it is too compliant with the requirements for the granting of special regime authorisations.
Whenever there is a communication of movement of goods for export or import, those goods are subject to inspection. These inspection circuits at the entrance or exit of goods to Europe bring as a consequence delays and extra expenses to the foreseen cost estimate for the international purchase-sale operation itself.
Since the operator has had his risks analysed during the country control body audit process, once he has achieved the status, it will have a significant reduction in these inspection circuits, with the consequent saving of time and money.
Any customs control action to be carried out following the analyses performed by the control body at the time of submission of the customs declarations of an AEO shall be notified sufficiently in advance to enable the operator to anticipate the formalities and documents required to carry out such controls. Having this information in advance can mean an average of two or three days in advance of the usual times for non-AEO operators. This way there are no extra days of delays and occupations for the shipping company and the port.
In the case of Spain, the most important entry points to the Union's customs territory, such as the port of Barcelona, Valencia, Algeciras, or Barajas airport, it is common to find waiting lists of two or three days for the inspection of goods by the Spanish Inland Revenue. All this entails an economic expense due to the delay caused. The AEO operator shall have priority over any other non-certified operator. As it would be colloquially said, "the AEO slips into the queue", being treated by the control body as a VIP client.
This advantage is very important if we take into account that the entry of goods and, therefore, possible inspection actions, take place in places distant from the place where the operators are established. Any company has the right to be present when inspections are carried out, especially when containers are opened, with or without the taking of samples. The regulations even allow you to appoint a representative to attend these inspections in person. But most of the time not even the company chooses this second possibility. If the company is certified with AEO, it will have the option of choosing the place where the inspection actions on the goods are carried out, being able to be present in those operations in a more comfortable way. To do this, it will ask for the inspection to take place in the Customs office closest to the establishment where the goods are to be received, with the consequent savings in travel, and thus taking advantage of this right which is so little used by operators.
Since the AEO figure seeks to secure the international supply chain and given that this status has been developed in many countries, mutual recognition as a partner guaranteeing such secure management makes international logistics processes, including border crossings, much faster if the countries have standardised their figures. The agreement of mutual recognition between AEO figures and the United States is the maximum exponent in this sense. US customs impose very stringent controls on incoming goods and they are greatly relaxed when these goods come from AEO-certified companies. Inspections in the United States can reach 40% of imports and only the AEOs, thanks to the mutual recognition agreement signed between these states, will benefit from almost total exemption from inspections.
It goes without saying that the common denominator of the advantages listed above is the economic and time savings that an AEO operator can make compared to other operators.
Since 2007, nearly 23000 European companies have enjoyed these advantages, and given that international trade is consolidating as a real option as opposed to a passing fad as an alternative or complement to national and European markets, it is time to consider AEO certification as a challenge in the short and medium term. I hope you're not late..
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Logistics Manager for the ATARFIL Group and member of the staff of associate professors for the German Institute of International Trade (IACI) for the Mibo Master in International Trade of the Almería Chamber of Commerce, the Mibo Master in International Operations of the Seville IACI and the MIE Master in Business Internationalisation of the Málaga Chamber of Commerce. Graduate in Industrial Technical Engineering specialised in Industrial Mechanics in Structures and Industrial Installations from the Polytechnic College of Córdoba (1998) and Master in Integrated Logistics and Supply Chain Management (SCM) from the ICIL Foundation in Seville (2008-2010). Since 2000, he has held different executive posts within the field of logistics and purchases.