Credit Management magazine October 2017

TRADE TALK
AEO – putting cargo in
the fast lane post-Brexit
Lesley Batchelor advises how AEO certification is
becoming increasingly desirable as an internationally
recognised tool to keep cargo moving.
AUTHOR – Lesley Batchelor OBE FCICM is Director General of The Institute of Export and International Trade.
Lesley Batchelor
INTERNATIONALLY recognised as
a mark of quality, an Authorised
Economic Operator (AEO) certificate
effectively demonstrates that
your role within the international
supply chain is secure, and that
your customs controls and procedures are
efficient and compliant.
While not mandatory, and with no
current plan to make it so, the EU is
nonetheless actively encouraging the
majority of organisations that export
outside of the EU to sign up to this
worldwide initiative, which has been
designed to ensure that international
supply chains are secure and controlled
from the point of origin through to the final
delivery destination.
Registration is open to all businesses
in the EU that are involved in trade with
non-EU countries, including logistics
operators, carriers, freight forwarders,
customs agents, importers, exporters and
manufacturers.
Although the initiative has been in place
for several years, the UK lags firmly behind
other EU countries, with just 599 approved
AEO registrations compared to Germany,
which has 6,092, the Netherlands with
1,539 and France which has 1,533 approved
registrations.
The reasons behind this vast disparity
in AEO numbers may be attributable to
the respective sizes of the logistics sector
in Germany and Netherlands in relation
to the UK. However, there is a growing
concern that UK businesses that trade
internationally may lose traction if the
scheme gains widespread popularity and
they are not part of that development.
Bearing that in mind, and within the
Single Market and the Customs Union
as we are at present, companies holding
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 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.
Developed as part of the World Customs
Organisations (WCO) SAFE framework of
standards, AEO certification was 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.
To qualify a business must be
established in the European Union
(EU), be actively involved in customs
operations and international trade and
have an Economic Operator Registration
and Identification (EORI) number, which
already applies to most exporters.
AEO acts increasingly as a quality
standard with many larger organisations
insisting on any trading partners having
this status. As part of the application
process, HM Revenue & Customs (HMRC)
officials will stringently assess, amongst
other things, a company’s finances,
site security, shipping procedures,
compliance with customs requirements,
and fulfilment of the relevant legal
and safety regulations. Companies that
already have IPP and ISO are half way to
attaining this highly secure accreditation.
Even though there can be no denying
that achieving AEO status is a time
consuming and often daunting exercise,
the commercial benefits can be immense
and include: greater access to priority
clearance; reduced administration;
traceability of flows of goods; increased
transport security; fewer delays in
despatch; improved security between
supply chain partners; quicker access to
certain customs procedures including
some of the HMRC safety and security
procedures.
As the number of businesses with
AEO status increases so will the pressure
on other companies to comply. Priority
clearance for AEO-certificated businesses
will, by default, mean that noncertificated
organisations will be dealt
with as a secondary concern. When time
is of the essence, such delays in delivery
will inevitably prove ever more costly.
Although it’s had a slow uptake, AEO is
gaining traction. 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.
Further information and applications
for AEO status can be made via the HMRC
website or the GOV.UK website.
Priority clearance
for AEO-certificated
businesses will, by
default, mean that noncertificated
organisations
will be dealt with as a
secondary concern.
The The Recognised Standard / / www.cicm.com / / November 2017 2017 / PAGE / PAGE 29 29