Authorized Economic Operator status brings advantages and responsibilities
With a new era in Turkish customs clearance techniques launched on Aug. 15, the famous “blue line” application for importation, which had great significance for importers, is being abolished, thereby disappointing expectations over its possible extension. Despite these expectations being heightened by low numbers of companies obtaining Authorized Economic Operator Status (AEOs) – which importers can now do – and the granting of an extension twice previously, the customs authority has already implemented its decision on the application of convenient customs practices with AEOs in importation.
The burden of work at the customs authority was expected to increase from Aug. 15 onwards due to the low number of companies that had obtained AEOs. Indeed, the import procedures, which should normally be handled in the blue line, began to be processed either in the red or yellow line upon cancellation of the blue line practice, which resulted in an increased workload in these lines. In fact, it has been observed that the companies that could not have obtained AEOs due to time restrictions and other reasons still prefer to benefit from reduced importation controls by obtaining an Authorized Economic Operator Status Certificate (AEOs C). The import procedures of these companies are completed by processing their customs declarations in the “yellow line,” i.e. through document checks only. This indicates that the burden of work will further increase.
The number of companies that had successfully completed the AEOs process as of Sept. 26 had reached 141, 126 of which are producer-importer companies. We think that this number will double or triple in a relatively short period of time, particularly upon the extension of the period of the “blue line application” in the importation practice. According to 2016 data, the number of companies using the blue line advantage for importation was 922. We estimate that the majority of these companies will have AEOs within two to three years.
A new approach to customs clearance
AEO status only represents a green line and doesn’t allow for the completion of customs clearance procedures of the goods without being stopped at customs. In fact, this application introduces a structural change to the rationale behind customs clearance. With the on-site customs clearance application, all loading and unloading procedures of the goods are permitted to be carried out at pre-authorized locations. While the goods are at the on-site customs clearance area, a connection to the customs authority is established via the system and customs declarations are completed, after which the customs procedures are completed, again via the system.
Compliance w th leg slat on more mportant for AEOs
The main goal in the process of obtaining AEOs was holding onto advantages granted by the blue line application. Many companies began the process of obtaining AEOs with this goal as their focus and concluded the process. A slight increase in import costs results in significant adversities for companies, considering that production depends on importation; therefore this approach does not appear wrong in the short term.
Companies with AEOs must demonstrate full compliance
However, having AEOs also imposes a series of duties for companies in addition to the advantages. First of all, companies with AEOs are supposed to demonstrate full compliance with the legislation in customs and foreign trade practices. They are expected to act in accordance with both current applications and the changing legislation, thus possess a systematic follow-up and business development discipline. In a sense, companies with AEOs are expected to carry out their foreign trade operations by empathizing with the customs authority.
On the other hand, companies with AEOs are followed up within the scope of “monitoring” activity by the customs authority. To be able to realize this follow-up, companies must update a form containing 108 questions every year and submit it to Regional Directorates. Furthermore, whether the conditions for AEOs and conditions required for additional permissions and/or authorities granted in relation with the certificate is checked again by Regional Directorates. For this purpose, companies with AEOs submit the documents that demonstrate their fulfillment of these conditions to the Regional Directorate they are registered with once every three years, as if making an application. An “operating report” is mentioned in the current regulations, within the scope of the “monitoring activity.” However, we know that a regulation has not been introduced to date concerning that matter and estimate that this part will be completed soon.
What should be done?
It has been observed that companies who previously owned a blue line are speeding up the process of obtaining AEOs now that the blue line application has ended. However, companies either with or are planning to get AEOs need to carry their perspective of this status beyond having an advantageous examination green line in the mediumand long-term. The AEOs gives them the opportunity to carry out customs procedures at factories like the customs authority in a sense, thanks to the on-site customs clearance applications.
On the other hand, the continuity of AEOs is as important as owning AEOs. The customs authority checks companies with AEOs periodically, within the scope of the “monitoring activity.” Therefore, companies with AEOs should focus on the continuity of their certificates as well, and monitor whether the conditions are met, with a corporate awareness. Otherwise, their status might be suspended or they may lose their right.