Authorized Economic Operators

News: The Central Board of Indirect Taxes & Customs (CBIC) has inaugurated the online filing of Authorised Economic Operators (AEO) applications. The web application is designed to ensure continuous real-time and digital monitoring of physically filed AEO applications for timely intervention and expedience.

Authorized Economic Operators:

  • The AEO concept is one of the main building blocks within the WCO SAFE Framework of Standards (SAFE).
  • The latter is part of the future international Customs model set out to support secure trade.
  • The growth of global trade and increasing security threats to the international movement of goods have forced customs administrations to shift their focus more and more to securing the international trade flow and away from the traditional task of collecting customs duties.
  • Recognizing these developments, the World Customs Organization, drafted the WCO Framework of Standards to Secure and Facilitate global trade (SAFE). In the framework, several standards are included that can assist Customs administrations in meeting these new challenges.
  • Developing an Authorized Economic Operator programme is a core part of SAFE.

Indian AEO Programme:

  • The AEO Programme was introduced as a pilot project in 2011.
  • The security standards detailed in WCO SAFE Framework are the basis of the Indian AEO programme.
  • There is a three tier AEO Status for Exporters and Importers. The three tiers are AEO T1, AEO T2, AEO T3, where AEO T3 is the highest level of accreditation.
  • Targets of Indian AEO Programme:
    • To provide business entities with an internationally recognized certification.
    • To recognize business entities as “secure and reliable” trading partners.
    • To incentivize business entities through defined benefits that translate into savings in time and cost.
    • Secure supply chain from point of export to import.
    • Enhanced border clearance.
    • Reduction in dwell time and related costs.
    • Customs advice/assistance if trade faces unexpected issues with Customs of countries.

Significance of the programme:

  • Worldwide recognition as safe, secure and compliant business partners in international trade.
  • India gets trade facilitation by a foreign country with whom India enters into a Mutual Recognition Agreement/Arrangement (MRA).
  • MRA is an international agreement by which two or more countries agree to recognize one another’s conformity assessment results (for example certifications or test results).
  • It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principal stakeholders of the international supply chain viz. importers, exporters, logistics providers, custodians or terminal operators, custom brokers and warehouse operators.
  • A liberalized, simplified and rationalized AEO accreditation process has potential to promote Ease of Doing Business and to emulate global best practices.
  • Facility of Direct Port Delivery of import Containers and/or Direct Port Entry of Export Containers.
  • It also fast tracking of refunds and adjudications. The Indian AEO Programme is a game-changer. It will not only achieve ‘Make in India’ but also substantially add to the vision and lead India to become a manufacturing and exporting power-house.

World Customs Organization (WCO)

  • WCO is an intergovernmental organization headquartered in Brussels, Belgium.
  • The WCO is noted for its work in areas covering international trade facilitation, customs enforcement activities, combating counterfeiting in support of Intellectual Property Rights (IPR), drugs enforcement, illegal weapons trading, integrity promotion, and delivering the sustainable capacity building to assist with customs reforms and modernization.
  • The WCO represents 179 Customs administrations that collectively process approximately 98% of world trade. As the global centre of Customs expertise, the WCO has the tools and expertise to assist implementation of all legal, policy, procedural, technological, and human resource aspects related to trade facilitation.
  • The WCO maintains the international Harmonized System (HS) goods nomenclature and administers the technical aspects of the World Trade Organization (WTO) Agreements on Customs Valuation and Rules of Origin.