AEO stands for Authorized Economic Operator, which is the collective name of high-credit enterprises certified by Customs around the world. You, as an importer and/or exporter, can also be an AEO participant in the international circulation of goods. In China, the official name of AEO is Advanced Certified Enterprise.

Benefits of AEO

Becoming an AEO means that you are well-managed in terms of internal controls, compliance with laws, regulations, and trade security controls. It can also be used as an indicator to show customers your excellent level of management. Nowadays, many companies will give priority to AEOs when selecting business partners. Apart from the above, there are also the below direct benefits for an AEO with Customs and other areas.

AEO Enables Enterprises to Enjoy Customs Facilitation Measures

According to the CACC Order No. 251 and Shuqifa [2022] No. 73, AEO enterprises can enjoy four categories of Customs facilitation measures, which are as follows:

• Priority Treatment … priority in import & export clearance formalities, handling, laboratory testing, port inspection, etc.
• Less Inspection…enjoy a lower Customs inspection rate for import and export goods (i.e., no more than 20% for general enterprises), enjoy a lower frequency of Customs audits, etc.
• Lower Cost… exemption of guarantee for goods that are temporarily imported or exported, used for processing trade, etc.
• Optimized Services… enjoy clearance facilitation measures in AEO mutual recognition countries or regions.

AEO Helps Enterprises to Become an “Approved Exporter”

An Approved Exporter refers to an enterprise that can issue a Declaration of Origin for its exported or produced goods, which meet the origin qualification under a relevant preferential trade agreement, such as RCEP. AEO is one of the prerequisites for becoming an Approved Exporter.

The Declaration of Origin can help enterprises confirm originating goods more conveniently without the administrative burdens of managing government-issued certificates of origin on a shipment-by-shipment basis.

 AEO Brings Benefits From 40 China Government Agencies

In October 2016, 40 central government agencies jointly signed the Memorandum of Cooperation on Implementing Trustworthy Incentives for Customs AEO enterprises to offer corresponding preferential and facilitative treatments to both domestic and overseas recognized AEO enterprises, such as:

• National Development and Reform Commission… offers certain incentives to AEO enterprises in the allocation of import and export quotas for grain, cotton, and other products, considering the applicant's credit status and the degree of difficulty in obtaining quotas or the number of quotas.
• Ministry of Commerce… offers priority and reduced lead time for AEO enterprises in the approval of Production Capacity, domestic sales of bonded goods, and End-user and End-use Statement, etc.
• Ministry of Finance... implements a tax rebate at the port of departure to certain enterprises that meet certain requirements and have AEO status.
  

AEO Certification Requirement

In October 2022, updated with the development of credit management measures, the GACC issued Announcement [2022] No. 106 — the China Customs Advanced Certified Enterprise Standards (hereinafter referred to as the "New Standards"), which largely integrates the certification items.

The New Standards include 1 General Standard (62 items) and 1 Individual Standard (32 items, covering 10 types of business). An enterprise can pass the certification if 1) it does not have "non-conforming" items and 2) it does not have more than three “basically conforming” items under the General Standards and the Special Standards, respectively.

Even if the company has a solid foundation in terms of policies and security measures for AEO, compiling AEO application documents would still require hundreds of internal written procedures and implementation records from various functions, including Import and Export, Trade Compliance, IT, Administration, Human Resources, Finance, Security, Warehouse, Production, Logistics, EHS, etc. Therefore, coordinating and garnering support from multiple functions to complete the AEO certification can be very demanding.

General Application Schedule

Given the convenience and benefits of being an AEO, if enterprises plan to apply to become AEO certified, Tradewin is glad to help. The application schedule can be broadly divided into the following four phases, lasting7~10 months:

• Phase I… 1~2 months for preliminary document collection and review.
• Phase II… 2~4 weeks for conformity assessment.
• Phase III… >3 months for improvement and preparation for application.
• Phase IV… 1~2 months for submission of application and Customs’ review and decision.

If you have any queries about AEO certification in China or other relevant consultancy demands, we would be pleased to hear from you.