Mr. Algirdas Semeta, the EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud has addressed a Statement welcoming EU-US mutual recognition of safe traders during the Post TEC Press Conference in Washington on 29 November 2011:

A huge step forward has been taken in the EU-US trade relationship – and in securing the supply chain at global level. Yesterday, I met with Secretary Napolitano and had an open and frank discussion of how we cooperate in this field. Following further contacts this morning, I am pleased to announce that the EU and USA have agreed to mutually recognise each other’s security certified operators. This means that smooth trade and secure trade will now go hand-in-hand.

In recognising each other’s safe traders, we are enabling them to enjoy lower costs and simpler procedures at customs, as well as greater predictability and fewer delays in moving goods. In Europe, 4,600 Authorised Economic Operators have been waiting eagerly for this. They stand to become more competitive, as they and their US trading partners will spend less time and resources on validation of their security standards. The 10,000 members of C-TPAT will have a much wider choice in certified counterparts, securing the supply chain from end to end. In short, this agreement will make trade easier and cheaper for companies, at a time when they particularly need such facilitation and support.

It will start to take effect no later than July 2012, once the I.T. systems are set up. So businesses and traders do not have long to wait before they see the benefits. Mutual recognition will also contribute to the enhanced security of both our trade lanes and our citizens, by allowing customs to concentrate their resources on targeting real risks.

As discussed today, we need to continue to work together to make the global supply chain more resilient and better protected against attack. Mutually recognising each other’s programmes is a concrete move in that direction.

This mutual recognition agreement is the result of years of work, involving all EU Member States. It clearly proves the benefits of Trans-Atlantic cooperation. In these times of economic difficulty, such a business-friendly and trade-friendly agreement is truly something to be welcomed.

A Joint Statement was signed in Brussels on 23 June 2011.

To read the full statement, click here.

We have selected the following in the Joint Statement:

“The EU and the US have the largest bilateral trade relationship and, together, account for about one-third of world trade. Other nations rely on transit through our airports, seaports and land border crossings. The partnership between the EU and the US protects these vital economic ties, sets an example and promotes consensus in other organisations. We commit ourselves to continuing our robust dialogue. Through advance communication, prior to taking action, we can be better prepared to respond efficiently and in unison to new treats as they evolve. We should:

• Develop bilateral, cross-agency cooperation and coordination to achieve better integration of customs security procedures with other border security controls, in order to enhance security and efficiency at a lower cost for trade and public authorities;
• Implement mutual recognition of EU and US trade partnership programmes (AEO and C-TPAT);”

An update of the Compendium of AEO Programmes is now available. The June 2011 edition of the AEO Compendium updates the data presented in the previous edition (July 2010).
The paper identifies existing AEO programmes and Customs compliance programmes. As of May 2011 the AEO Compendium includes information on 31 different programmes, both AEO and Compliance programmes. While technically not AEOs, Customs compliance programmes can be regarded as an initial step towards the establishment of an AEO programme.

To arrange the data systematically, all programmes are divided into 3 types: operational AEO programmes, AEO programmes to be launched in the near future and Customs compliance programmes.

Besides providing basis information on AEO and Customs compliance programmes, the Compendium also includes a short overview of AEO authorisation procedures and benefits offered by programmes.

The paper was written by Mariya Polner of the WCO’s Research and Strategies Unit in the Office of the Secretary General. Please click here to read the Compendium of Authorised Economic Operator Programmes (2011 edition).

Ensuring the security of the global supply chain while facilitating trade is a challenge both for customs authorities and economic operators. To meet this challenge, many countries have introduced additional security measures to reinforce risk management in accordance with the WCO SAFE Framework of Standards.

In risk management, the reliability of traders is of crucial importance. Established authorised economic operators (AEOs) that adhere to security and compliance criteria allow customs to focus on risky trade flows.

In exchange, AEOs receive benefits in form of trade facilitation. Mutual recognition of AEOs provides reliable operators additional trade facilitation benefits in partner countries; it also allows customs to target high risk shipments more effectively.

Mutual Recognition of AEOs with Japan

The implementation of mutual recognition of AEOs between the EU and Japan will begin on 24th May 2011. From this date, AEOs in the EU and Japan will start to benefit from this mutual recognition.

Mutual recognition benefits for EU AEOs in Japan

The implementation of mutual recognition with Japan means that the AEO status of EU importers and exporters will be taken into account during the security risk assessment procedures by Japanese Customs in Japan, if the procedure utlined below is followed. In order to benefit from the mutual recognition in Japan, EU AEO importers and exporters are required to inform their Japanese business partners of their 12 character code for mutual recognition purposes with Japan. These codes have been issued by Japan Customs for all EU AEOs who gave their consent to be included in mutual recognition of AEOs. The European Commission will inform the EU AEOs of these Japanese identification codes by letter. Please note that the code for the purpose of Mutual Recognition with Japan is different from the EORI number of EU companies.

Trade that is coming from EU AEO exporters or going to EU AEO importers will benefit at the stage of the Japanese import / export declaration. The Japanese importers/exporters (or their representatives) will enter the notified 12 character code issued for EU AEOs by Japan Customs for mutual recognition purposes in the relevant electronic declaration field for foreign importers/exporters.

Mutual recognition benefits for Japanese AEOs in the EU

For Japanese companies to receive benefits in the EU, in relation to the security risk assessment at entry or exit, EU traders may be approached by their Japanese AEO business partners and informed of the 14 character mutual recognition code assigned to Japanese AEOs. Alternatively, EU traders may proactively ask their Japanese AEO business partners for their 14 character mutual recognition code. This code should be entered in the declaration form in the field entitled “Documents produced, certificates and authorisations”. In addition, the TARIC code “Y031″ needs to be completed in order to indicate that the cargo is coming from or going to AEOs of a country with which the EU has concluded a mutual recognition agreement regarding AEO programmes. At entry in the EU, the TARIC code “Y031″ and the 14 character mutual recognition code of Japanese AEOs needs to be used in the Entry Summary Declaration, or alternatively in the customs declaration if this declaration replaces the Entry Summary Declaration. At export, the TARIC code “Y031″ and the 14 character mutual recognition code of Japanese AEOs needs to be used in the customs declaration, or alternatively if no customs declaration is required, in the Exit Summary Declaration.

Source: Press release of the European Commission Taxation and Customs Union, 16 May 2011

The benefits and advantages related to the AEO status of economic operators have been widely spread. The most important being the reduced guarantee, quick change to emergency procedures and the good reputation of the AEO company with respect to security in their supply chain. But do you know that the status can be withdrawn, revoked or suspended?

In principle the AEO certificate is not time-limited. However, situations may arise which require the certificate to be reviewed. Customs administrations have two working methods to verify whether the conditions for AEO status are satisfactory, i.e. reassessment and monitoring.

Reassessment has been regulated by the CCIP and serves to verify that the AEO still meets the conditions at a certain point of time. It will usually be carried out if the legal situation changes or if there is evidence that the holder of the certificate does not meet or no longer meets the AEO criteria. In addition, the customs administration can perform monitoring. This possibility is also provided by the CCIP which permits checks to be carried out on an on-going basis and in the absence of a special event.

Withdrawal: It is possible to cancel or withdraw an AEO certificate when:
1/ it has been issued by an authority without requisite jurisdiction over the subject-matter; 2/ it has been obtained by unfair means such as deceit, threats or bribery; 3/ the beneficiary has obtained the status by providing information which was essentially incorrect or incomplete; 4/ the beneficiary was aware of its illegality, or was unaware thereof due to gross negligence.

Revocation: An AEO status may be revoked in whole or in part:
1/ if the economic operator has failed to take the necessary remedial measures to comply with the requirements of the relevant AEO certificate and therefore does not meet the certification requirements; 2/ when serious infringements related to customs rules have been committed by the AEO and there is no further right of appeal 3/ upon request of the AEO.

Suspension: The AEO status can be suspended for three different reasons:
1/ non-compliance with the conditions or criteria for AEO certification, where the customs authority established that the operator does not comply with the conditions or criteria for the AEO certificate. This covers cases where the conditions did not exist at the time of the certification. 2/ Sufficient reasons to believe that a criminal act took place such as fraud, money laundry or the forgery of documents. 3/ upon request of the AEO.

Customs authorities are to communicate their findings to the concerned economic operator before taking a decision. The economic operator is entitled to correct the situation and/or express his point of view within 30 calendar days, starting from the date of communication. In the event of non-compliance with the conditions for an AEO certificate, the operator may take measures such as remedying safety deficiencies, improving customs processes, reorganising his accounts or restoring solvency. However, such measures are not possible in the event of the second reason for suspension, that is, where the customs authorities have sufficient reason to believe that an AEO has committed an offence.

A field research on this topic on the Belgian territory learns that 19 companies have revoked their application and 8 applications have been refused so far. Reasons for revocation or refusal of application are often solvency or safety deficiencies.