AEO for fast clear­ance: Com­pli­ance & mu­tual un­der­stand­ing is the key

In In­dia, the CBEC re­leased its first cir­cu­lar about AEO (Au­tho­rised Eco­nomic Op­er­a­tor) pro­gramme in­tro­duc­ing it as a pi­lot project on Au­gust 23, 2011. At the end of the pi­lot project on July 18, 2012; the AEO sta­tus was awarded to three com­pa­nies. On Nov

Cargo Talk - - Contents -

What is AEO?

AEO (Au­tho­rised Eco­nomic Op­er­a­tor) is a party in­volved in the in­ter­na­tional move­ment of goods in what­ever func­tion that has been ap­proved by or on be­half of a Na­tional Cus­toms ad­min­is­tra­tion as com­ply­ing with WCO or an equiv­a­lent sup­ply chain se­cu­rity stan­dards. AEO may in­clude man­u­fac­tur­ers, im­porters, ex­porters, bro­kers, car­ri­ers, con­sol­ida­tors, in­ter­me­di­aries, ports, air­ports, ter­mi­nal op­er­a­tors, in­te­grated op­er­a­tors, ware­houses and dis­trib­u­tors and freight for­warders.

The AEO cer­ti­fi­ca­tion finds its ori­gin in the ter­ror­ist at­tacks in US on Septem­ber 11, 2001. The risk of ter­ror­ist at­tack does not only con­cern the trans­porta­tion of pas­sen­gers, but also the trans­port of goods. There­fore, the US also wanted to se­cure the flow of the goods.

Upon con­sul­ta­tion with the Amer­i­can trade and in­dus­try, the Cus­toms cre­ated C-TPAT (Cus­toms and Trade Pact Against Ter­ror­ism). The C-TPAT is a cer­ti­fi­ca­tion for com­pa­nies al­low­ing them to prove to Cus­toms that the com­pany is ‘safe and re­li­able’.

SAFE Frame­work of Stan­dards

At the June 2005 an­nual ses­sions of the WCO Coun­cil in Brus­sels, Di­rec­tors Gen­eral of Cus­toms rep­re­sent­ing the mem­bers of WCO adopted the ‘SAFE Frame­work’ of stan­dards to se­cure and fa­cil­i­tate global trade by unan­i­mous ac­cla­ma­tion.

The im­ple­men­ta­tion of SAFE Frame­work will be car­ried out on a phased ap­proach by na­tional cus­toms au­thor­i­ties in ac­cor­dance with its ad­min­is­tra­tion ca­pac­ity and leg­isla­tive au­thor­ity. The WCO Com­pen­dium of AEO pro­grammes (AEO Com­pen­dium) is up­dated an­nu­ally to track the de­vel­op­ment of ex­ist­ing AEO pro­grammes, those in the process of be­ing launched, and the cus­toms com­pli­ance pro­grammes. Mean­while, more than 170 coun­tries have ex­pressed their in­ten­tion to im­ple­ment the SAFE Frame­work.

The Frame­work aims to:

Es­tab­lish stan­dards that pro­vide sup­ply-chain se­cu­rity and fa­cil­i­ta­tion to goods be­ing traded in­ter­na­tion­ally En­able in­te­grated and har­monised sup­ply-chain man­age­ment for all modes of trans­port En­hance the role, func­tions and ca­pa­bil­i­ties of Cus­toms to meet the chal­lenges and op­por­tu­ni­ties of the 21st cen­tury Strengthen net­work­ing ar­range­ments be­tween Cus­toms to im­prove their ca­pa­bil­ity to de­tect high-risk con­sign­ments Pro­mote co­op­er­a­tion be­tween the Cus­toms and busi­ness com­mu­ni­ties Cham­pion the seam­less move­ment of goods through se­cure in­ter­na­tional trade sup­ply chains

Mu­tual Recog­ni­tion Ar­range­ment

Mu­tual Recog­ni­tion is a broad con­cept (by main­tain­ing cer­tain com­pli­ances) whereby an ac­tion or de­ci­sion taken or an au­tho­ri­sa­tion that has been prop­erly granted by one cus­toms ad­min­is­tra­tion is recog­nised and ac­cepted by another cus­toms ad­min­is­tra­tion.

There is a need of mu­tual recog­ni­tion ef­forts be­tween na­tional cus­toms au­thor­i­ties, which will lead to an in­ter­na­tional recog­ni­tion of AEO sta­tus. Na­tional cus­toms au­thor­i­ties are ex­pected to co­op­er­ate with each other and to achieve mu­tual recog­ni­tion of na­tional AEO pro­grammes and cus­toms con­trol stan­dards.

Chal­lenges if you are Non-AEO

In­creas­ing bar­ri­ers for in­ter­na­tional trade Lim­i­ta­tions/de­lays within sup­ply chain In­crease of cus­toms in­ter­ven­tions and cus­toms con­trols Loss of rep­u­ta­tion as a Non-AEO More Au­dits

The Way Ahead

Vol­un­tary AEO par­tic­i­pa­tion will be the pre­con­di­tion for main­tain­ing an ef­fi­cient cus­toms-re­lated sup­ply chain process in the fu­ture. Other coun­tries spe­cially in APEC, EU, and even in Africa, has taken the lead in AEO ap­provals. In­dia’s lo­gis­tics cost are al­ready high com­pare with de­vel­oped coun­tries. In the ab­sence of AEO, it will fur­ther in­crease. In­dian sup­pli­ers/ ser­vice providers will be non pre­ferred. Higher par­tic­i­pa­tion in AEO pro­gramme will bring pres­sure on Govt. to make AEO ap­provals on time and work on Mu­tual Recog­ni­tion Ar­range­ments ( MRA).

Pramod Sant Vice Pres­i­dent, Sup­ply Chain

man­age­ment, Siemens

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