AEO – what is it and could your business benefit?
03 January 2018
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.
Could AEO be the solution for customs to achieve the government’s aim of frictionless borders?
What is AEO
Internationally recognised as a mark of quality, an 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.
Whilst not mandatory, and with no current plan to make it so, the EU is none the less actively encouraging the majority of organisations who 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.
Who can become AEO
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 537 approved AEO registrations compared to Germany, which has 6031, the Netherlands with 1514 and France who have 1438 approved registrations (figures correct as at Feb 2017).
The reasons behind this vast disparity in AOE 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.
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 is most exporters.
AEO acts increasingly as a quality standard with many larger organisations insisting on this as an integral part of any trading partners. As part of the application process, HM Revenue & Customs (HMRC) officials will stringently assess, amongst other things, the company’s finances, site security, shipping procedures, compliance with customs requirements and fulfilment of the relevant legal and safety regulations. Companies who 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, but 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 steadily increases, so will the pressure on other companies to also comply. Priority clearance for AEO certificated businesses will, by default, mean that non-certificated 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.
The UK may be behind many of its EU counterparts when it comes to AEO applications, but with a plethora of resources and guidance available, the support is there for British businesses to make an informed decision on whether AEO status is right for them.
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