On Friday 19th July we will be running our summer edition of 'Talking World Trade Matters' - a member-only webinar for members of the Institute of Export & International Trade - on the topic of AEO. These webinars are your opportunity to ask our experts questions about the major topics and developments in global trade today.
Speaking on the AEO edition will be Lesley Batchelor OBE (Director General of the IOE&IT) and Holly Tonge (Director of Special Projects at the IOE&IT).
Below you can read an article that Holly wrote for the Winter 2017 edition of World Trade Matters.
AEO status will put cargo in the fast lane post-Brexit
Frictionless trade: the shipping and logistics industry is demanding it, the Government is promising to deliver it – and yet, as one expert recently pointed out: “There is no such thing as ‘frictionless trade’ – trade always has some complexity.”
Bearing that in mind, and within the Single Market and the Customs Union as we are at present, companies holding Authorised Economic Operator (AEO) certification have already had a clear advantage when exporting, especially to the United States. Post-Brexit, AEO certification will become even more desirable as an internationally recognised tool to keep cargo moving.
Created by the World Customs Organization, AEO status has more than proved its worth in smoothing the flow of cargo, whether to and from Europe, or in trade with the United States and elsewhere.
How did it start? After 9/11, the international supply chain was identified as a weak link in national security, which terrorists could use to smuggle or target ports. The United States was instrumental in designing new standards for supply chain security with C-TPAT: Customs-Trade Partnership Against Terrorism.
AEO was developed in response, as part of the WCO’s SAFE framework of standards, designed to secure and facilitate global trade. The framework is based on countries having mutual recognition agreements to give priority clearance to trusted AEO exporters and importers across borders.
AEO certification demonstrates that the trusted trader reviews and enhances its processes and procedures to reinforce the physical security of cargo and premises, as well as the security of their IT systems and data back-ups – and all of this must be audited and approved by Customs. The reward – AEO operators can expect to see their goods in the fast lane of trade, rather than on the hard shoulder.
However, certification has never been compulsory, and our experience is that traders in the UK have seen it as ‘nice to have’ rather than vital. To date, the EU has had a much higher take-up of AEO. Post-Brexit, UK manufacturers and exporters looking to compete with their EU equivalents really will need AEO to assure overseas clients that their shipments will not be subject to unnecessary delays.
There are other important advantages: AEO certification shows that measures are taken to protect the integrity of the cargo, as well as information in relation to the client and the movement – and that means tampering or theft is far less likely. The present version of EU AEO also covers Customs compliance – it’s likely that the UK will adopt this, and this gives the trader assurance that they are correctly adhering to Customs formalities, thereby avoiding what can often be hefty penalties for breaches.
The WCO views AEO as the future of international trade; through creating Customs-business partnerships, it can give approved, legitimate traders priority and deliver simplified procedures, so that Customs authorities can focus on targeting the ‘unknown’ and possibly illegal.
Although it’s had a slow uptake, AEO is gaining speed. That said, it isn’t all plain sailing for those seeking certification. Customs authorities in the UK need to focus urgently on their partnership approach and work to achieve continued improvements in the AEO standard and application process, to ensure it delivers the right benefits to companies post-Brexit.
The Institute is on hand to help businesses with the application process
The HMRC audit visit can be an arduous process, which is why the Institute of Export & International Trade this year launched a new one-day training course and 3-tiered consultancy service to support businesses with the application process and to prepare for the visit.
The one-day training course helps companies to understand the requirements for attaining AEO and benefits this reaps. It guides them through the application process and highlights the pitfalls that companies typically experience, explaining how to avoid delays and mistakes.
More information about our AEO training course
The consultancy package offers 3 tiers of support: a ‘Readiness Review’, a ‘Preparation Project’ and support for the application and submission itself.
One of our experts will go into the business and help take them through every stage of acquiring and maintaining AEO status.
More information about our AEO consultancy
Book your AEO Readiness Review now - £1500+VAT for IOE&IT members, £1750+VAT for non-members. Call 01733 404400 or email institute@export.org.uk