What are authorized economic operators (AEOs)?
AEOs are businesses and other entities certified by customs authorities to trade goods across borders under international supply chain security standards. An AEO status can provide increased confidence for customs authorities, trade partners, and customers. This status also certifies goods to obtain priority clearance with customs and be subject to fewer physical and documentation checks. Products shipped by companies with AEO status are also given priority as AEO consignments if they are selected for controls at the border. For additional information on AEOs, national examples and implementation guidance, see the United Nations Economic Commission for Europe’s (UNECE) page on Authorized Economic Operator (AEO).
Why does an AEO status matter for trade?
With international trade increasing over the years, cross-border movement of goods has become a complex process for customs authorities to manage. There are increased security standards in many economies, along with an increase of small, low-value shipments. In response, international guidelines on AEO programs were adopted to streamline clearance processes conducted by customs and border authorities and reduce delivery times in cross-border trade transactions. The World Customs Organization (WCO) published an AEO Compendium in 2020 to provide policymakers with an overview of existing AEO programs around the world and a list of the frameworks that underpin AEO-related standards.
How can AEO status benefit MSMEs and what are the potential challenges?
MSMEs can apply for AEO status at the customs authorities in their countries (if available). According to the World Customs Organization, there are currently 97 operational AEO programs worldwide, with 20 more under development (See the WCO AEO Compendium 2020 Edition for more information on national AEO programmes). Although different governments have different requirements for becoming an AEO, broadly a company must comply with national domestic registration laws, abide by customs and taxation requirements, maintain appropriate records, and practice required safety and security measures. Sometimes these compliance requirements can be burdensome and the process to attain AEO status difficult. According to the International Trade Centre’s (ITC) trade facilitation guide, “it is crucial to design a mechanism which encourages SMEs’ participation in authorized operator schemes.” Further, cooperation on AEO agreements and a mutual recognition of AEOs themselves could facilitate MSME participation in these programs. For additional guidance on the implications of AEO programs for MSMEs, see WCO’s The Authorized Economic Operator and the Small and Medium Enterprise.
Where can I access policy guidelines and frameworks?
- International Trade Centre: The ITC provides an implementation guide for the World Trade Organization’s (WTO) Trade Facilitation Agreement, including information on facilitation measures for authorized operators. Visit the ITC website.
- WCO Authorized Economic Operators (AEO) Implementation Guidance: Presents a 9-phase approach to implement an AEO program under the SAFE package, which aims to provide customs administrations with guidance on AEO-related matters. Visit the WCO website.
- WCO SAFE Package: The above-mentioned SAFE package compiles a set of standards, frameworks and tools developed by the WCO over time to secure and facilitate global trade. These are designed for building capacity in trade facilitation matters and guiding countries in the implementation of AEO programs. Visit the WCO site.
Where can I see best practices and national examples?
- APEC’s Integrating SMEs in Authorized Economic Operator Certification: The Asia-Pacific Economic Cooperation (APEC) secretariat documents best practices and recommendations for policymakers and businesses to seize trade facilitation opportunities from implementing AEO programs. Visit the APEC website.
- COMCEC’s Authorized Economic Operator Programs in the Islamic Countries: The Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation (COMCEC) offers an analysis on AEO program awareness, design, and implementation in three best practices in the world, and among member states of the Organization of the Islamic Cooperation (OIC). Visit the COMCEC site.
- International Trade Centre: The ITC has documented best practices in AEO programs that have led to benefits for businesses and customs authorities in streamlining trade-related procedures. These are described in their study Faster Customs, Faster Trade.
- Mexico’s AEO Programme: The Inter-American Development Bank has documented evidence on the impact that AEO certification has provided to exporting firms. Visit the IDB site.
- WCO’s Compendium of Authorized Economic Operator Programmes: This compendium features a list of operational AEO programmes and AEO programmes under development across world regions. Visit the WCO site.
- Informal Working Group on MSMEs: Following recommendations submitted by business associations, the Informal Working Group on MSMEs prepared a consolidated document that includes the topic “AEO programmes.”